Al Kelly
Chairman and Chief Executive Officer at Visa
Good afternoon everybody and thank you for joining. Before jumping in, I want to acknowledge that this is Jennifer Como's first earnings call in her new position. About two months ago, Jennifer was promoted the Head of Investor Relations, which was a very well deserved recognition of her work over the last three years with us.
I want to start by briefly addressing the situation in Russia and Ukraine. I've seen firsthand the pain brought about by Russia's attack on Ukraine and its people, including our colleagues in both Ukraine and Russia. We are very focussed on supporting them, the bravery, strength, and resilience of our colleagues is incredibly inspiring as is the grit of the Ukrainian military. Even with the invasion of Ukraine and lingering impacts of Omicron, volumes transactions, and credentials drove strong second-quarter performance.
Overall PB [Phonetic] was up 135% versus three years ago. Cross border volumes excluding intra-Europe were 112% versus three years ago. It's important to note the travel-related cross border rose 82% versus three years ago, up five points from Q1. Process transactions were 138% versus three years ago. In terms of the big picture after the short 4 to 5 week impact of Omicron in December and January, in the United States and many other parts of the world, the recovery continues to be robust.
At this stage, in terms of volumes, we have seen no noticable impact due to inflation, supply chain issues or the war in Ukraine. In the U.S. payments volume index 2019 was 144 in the quarter. Volume growth relative to three years ago has been stable and strong now for four quarters in a row. We're looking at a specific-spend category for credit cards. We saw greater than a 10% point improvement in the 3-year in debt from Q1 to Q2 in travel, retail goods, food and drug, restaurant, QSR and fuel.
As a reminder, debit is growing over a quarter in fiscal '21 where there were two stimulus distributions. Even as credit continues to recover, debit remains 20% above the pre-pandemic trend line. Across all products, spend categories representing 88% of PB are over 120% indexed -- over 120 index, three years ago and nearly 2/3 between 140 and 160. Against this backdrop, visas performance was very strong. Net revenues grew 25% year-over-year and non-GAAP EPS was 179, up 30%. As we look ahead, our business will have a reset due to Russia, but we still expect accelerated revenue growth versus pre-COVID over the coming years. This is because there is still ample opportunity around the world across our three growth levers of consumer payments, new flows, and value-added services that our strategy is yielding excellent results.
First in consumer payments, we continue to displace cash at a strong rate. In Q2, we saw debit cash volumes that Visa grow 2% while debit payments volumes grew 12%. Cash displacement continued around the world. Year over year across debit and credit, they were 7.9 billion more payments transactions and $16 million less cash transactions. Last quarter I highlighted the shift from cash to payments volume in Latin America, and that trend continued in this quarter. Additionally, CEMEA is experiencing a similar shift. In full year 2019, cash was 59% of total volume. Last year in Q2 it was 50% and this quarter it was 46%.
Growth in consumer payments is driven by adding credentials and acceptance a deepening engagement. Our card credentials recently increased to over $3.9 billion [Phonetic], up 9% in one year, including 10% growth in the United States. On the acceptance side, we have 80 million merchant locations, including small businesses behind players like Stripe and Square are the number is actually over a 100 million. We have seen very strong performance location growth recently in our Latin America and Asia Pacific regions, up 30% and 20% respectively.
Let me just highlight a few regional examples of progress in consumer payments. In Europe, overall credentials grew 6%, which is nearly double the historic rate for each of the past eight quarters, helped by previously announced deals with BNP Paribas '40s [Phonetic] in Belgium contributing more than 4 million credentials since their announcement to issue with Visa. Across Europe, we continue to strengthen our debit business. We recently announced the win with Global Bank [Phonetic] representing a multi-million credential opportunity. We also renewed our business with one of the largest banks in the Nordics, Nordea.
On the acceptance front, we continue to pioneer new areas of acceptance even in mature digital markets. One recent example in Europe is with electronic -- electric vehicle charging. We were the first payments and financial services company to join the charging interface initiative and are working with manufacturers to open up what is estimated to represent 3 million potential acceptance points in Europe by 2030.
In Latin America, we saw strong credential growth up 21% year-over-year. Two renewals to highlight this quarter. [Indecipherable] Brazil's third-largest issuer for their credit portfolio and digital bank [Indecipherable] one of Brazil's fastest growing fintechs with over 15 billion clients for their credit and prepaid portfolios.
In Africa, Visa has signed a partnership with Vodacom, South Africa this deal together with previously announced partnerships with M-PESA Africa and Safaricom covers 130 million customers in the entire Vodacom Group in sub-Saharan Africa. Through this partnership Vodacom will exclusively issue Visa payment credentials, deploy new payment flows through Visa Direct and utilize CyberSource.
In the United States, we renewed and won several partnerships this quarter. First Visa and USAA have recently renewed our longstanding issuing partnership. Second, we extended our existing relationship agreement with M&T Bank as their issuance partner including migrating the business resulting from the recently completed acquisition of People's United. Over the past three years, merger activity of regional banks has increased, and this is another example of Visa successfully partnering to grow with our clients.
Finally supporting the U.S. government, it is an important priority for us and we retained our business with the financial agent that manages the U.S. debit card program. This Visa-branded program is a key component of treasuries goal to deliver 99% of federal payments digitally by 2030. A key vector of growth in consumer payments are our co-brand cards, which are particularly attractive to affluent customer. In Q2, affluent credit card spending was well above 2019 levels in several markets including the U.S. and the U.K. Our U.S. co-brand active cards were up nearly 30% from 2019 to 2022 and we have seven of the top 10 co-brands in the United States and eight of the top 10 co-brands globally. This past quarter, we renewed our co-brand relationship with AAA, visas longest standing co-brand partner and over 40-year relationship.
In India, we're pleased to have signed a long-term co-brand agreement with Airtel, one of the largest mobile operators in the world with nearly 356 million subscribers.
In CEMEA, Emirates and BD a leading banking group has expanded its longstanding partnership with these by introducing the premium co-brand program with it Ethihad guest, the loyalty program with Ethihad Airlines with 8 million members.
In Uganda, we partnered with got the National Social Security Fund to issue co-brand cards, to 2 million beneficiaries.
And just a few weeks ago, it was announced that the U.S. Amazon Prime Rewards Visa Signature Card has been renewed with Chase and Visa. Visa is also pleased to have reached a broad global agreement with Amazon. This agreement includes the acceptance of Visa at all Amazon stores and sites today as well as a joint commitment to collaboration on new product and technology initiatives to ensure innovative payment experiences for our customers into the future.
In Q2, we also continue to enable new ways to pay from installments to crypto. In the installment space, we previously announced the global deal with Florida. They have now issued their co-branded card in Europe and recently opened the wait-list in the United States, where they have 25 million customers. In the crypto space, we continue to work with governments globally on potential CBDCs. This quarter we were selected as a finalist in Brazil CBDC lift challenge. The concept is a B2B solution that seeks to leverage CBDC to help small businesses access global investors and drive financial inclusion.
On the engagement front, tap to pay continues to accelerate growth in the United States. We are over 20% tap-to-pay penetration, marking the second-largest market by number of taps. And Target [Phonetic] has become the first U.S. retail merchant to [Indecipherable] 50% tap-to-pay penetration or face-to-face payments. Transit is one of the best ways to perpetuate tapping and the first half of fiscal '22 has set records. We enabled 50 cities around the world, including Thailand, Japan, Turkey, Italy, Switzerland, Norway, and Canada, bringing our tap to ride footprint to over 500 travel -- transit authorities. We processed over 500 million Visa tap-to-ride transactions globally versus $700 million for all of last year.
To summarize, there is significant opportunity and consumer payments. Visa continues to grow credentials and acceptance with deepening engagement and Visa enable innovation at scale for players across the ecosystem from instalments, the crypto to merchants.
Now moving to new flows, which in Q2 at over 20% revenue growth. In Q2, our commercial payments volume was 138% of 2019, what's more of this recovery is relatively broad-based across segments and spend time. On the B2B carded front in the U.S. [Indecipherable] Bank announced two commercial solutions for middle-market businesses, one Visa commercial preferred, a commercial rewards card designed to help manage daily business spend and two Visa Commercial Pay which will help improve cash while management reconciliation and reporting.
In Latin America, we recorded [Phonetic] progress with B2B Fintech tribal which is chosen Visa for card issuance including virtual cards on its modern corporate card and spend management platform tailored for start up in nine countries. Their wallets are global platform enabling digital business is to manage payments and money movement across borders previously launched programs with Visa in Australia, Hong Kong, and the U.K. Recently, they introduced virtual Visa cards in the United States, Netherlands and Singapore to enable businesses to easily make digital card payments around the world. In our cross-border B2B business, Visa B2B Connect continues to expand its global footprint and the first half of 2022 we added banks for the first time in Tanzania, Uganda, Angola, Thailand, and Poland.
Now turning to Visa Direct, transactions in the second quarter grew 20%. Vasant will speak more about this but Russia was our second largest market for Visa Direct and represented about 17% of our transactions in fiscal 2021. So in short, Visa Direct will be impacted by the suspension of Russian operations. But even with the Russia business -- without the Russian business, we will see growth ahead driven by many use cases and countries. For example, domestic P2P which accounted for the majority of our Russian business is still a large opportunity and we continue to expand to new markets. We will still large launch our inaugural Visa Direct use case in Israel for P2P in partnership with Bit the largest P2P app in the market.
I'll focus on two other use cases today, payouts and remittances. First with payouts, we see -- we're seeing momentum in a number of industries and transactions are up 35% year-over-year. In travel, we launched Visa Direct with Booking.com to enable customer refunds and loyalty payouts. In the gig economy Pay Fair a leading FinTech that as partners such as Uber, Lyft and DoorDash has added Visa Direct to its platform to help facilitate real-time payment experiences for over $0.5 million gig workers they serve. And digital commerce partner [Indecipherable] will use Visa Direct to enable cross-border payments for their five million customers including marketplaces and gig economy players.
Second cross border P2P or global remittances which are higher yielding Visa Direct transactions represent a significant opportunity. While we are just getting started this quarter transactions grew nearly 50% year-over-year after announcing our relationship in fiscal fourth-quarter with [Indecipherable] an international card to card payments platform, which serves over six million customers and 17,000 SMEs, they have launch -- they are cross-border service with Visa Direct from the U.K. and U.S. to over 100 corridors.
While the U.S. is the top source for remittances, the UAE is the second largest source for country remittances followed by Saudi Arabia, according to the World Bank. Altogether, the Gulf Cooperation Council countries account for more than $100 billion and outbound remittances. This past quarter, we added several partnerships to help digitize remittances in the region. First, [Indecipherable] the largest Exchange House in Kuwait. Second [Indecipherable] the remittance of payment arm of bank [Indecipherable] and Market Leader for ongoing remittances in the Kingdom of the of Saudi Arabia and third in the UAE with mobile money powered by Lulu [Phonetic] Iinternational exchange and Network International to enable to five million users of Lulu app to send money to cross border. [Indecipherable] key Visa Direct enablement partners both signed agreements, to deepen relationships in existing geographies, and to expand to net new markets globally across numerous use cases. In sum, we have made excellent early progress against $185 trillion new flows opportunity, but there is tremendous room for accelerated growth ahead.
Now let me move to value-added services which had Q2 revenue growth of over 20% as well. First, we recently closed our acquisition of Tink. Tink is an European open-banking platform that connects to more than 3400 banks that reach over $250 million bank customers across Europe. Through a single API Tink enables its customers to move money, access aggregated financial data and use smart financial services such as risk insights and account verification. Visa brings proven infrastructure and sustained investment in resilience, cyber security, and fraud, which will help accelerate the adoption of open banking and create a secure, reliable platform for innovation.
Let me highlight some of the progress in value-added services. First Visa consulting and analytics, last quarter I announced the launch of our specialized global crypto advisory practice. We have seen interest from hundreds of clients globally and have committed engagements with 30 already covering their digital currency strategy, product development, and their go-to-market plans.
Second risk identity and authentication. In tokenization, we have now crossed the 3.5 billion token mark, across more than 8600 issuers in over 150 markets at 1.2 million merchants tokens have led to a 2.5 point increase in approval rates at a 28% reduction in fraud rates this past quarter and card-not-present payments.Our key risk solutions, Visa Advanced Authorization, Visa Risk Manager, screened about 30% more transactions in the first half of 2022 versus 2021.
Third Cybersource, our gateway capability, has seen considerable progress just crossing the milestone of the one-millionth merchant account on-boarded. I spoke about transit before Cybersource which could play a key role in transit acceptance added nearly 15 projects in the first half in Thailand, Italy, and Japan, among others.
So to summarize our value-added services represent a compelling way to diversify our revenue streams while helping our clients in bringing innovation to the payments ecosystem. Our global infrastructure is providing connectivity through our network of networks to power more traditional payment types and newer ways to pay and move money. Our brand is strong, our network of networks is expanding, our business is performing well and our people are motivated and passionate. We expect all our efforts will help power accelerated growth in the years to come. And with that let me turn it over to Vasant.
